Subscribe!Welcome! This blog tracks the real estate market in the Central Shenandoah Valley, featuring market data and analysis, an exploration of common buying and selling questions, and candid commentary on all things real estate.
If you are interested in discussing any of the topics on this blog, or the details of your specific real estate situation, call or e-mail me!
Selling
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Three small, but significant words . . . "on or about" |
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 The "Settlement" section of a standard Virginia real estate contract reads....Settlement shall be made at the office of the Purchaser's settlement agent on or about October 1, 2008. Did you catch the three small words so innocently wedged between the location and date of the closing? The meaning of those three words (on or about) is often overlooked! Some sellers think, or assume that the date filled into the contract will be the actual closing date. It very well might be --- but oftentimes a buyer or seller's circumstances will shift it a few days in either direction. So, the first thing to remember is that it is usually just a close estimate of when the closing will occur. But what happens if (in the above example) a buyer informs the seller that they won't actually close until October 22nd --- three weeks later. May the seller indignantly demand that the buyer close on October 1st, OR ELSE? Contractually, no! "On or about" is typically understood to mean plus/minus 30-60 days, depending on the attorney. That certainly allows for some flexibility, and this is the second thing to remember --- the standard contract language will not allow you to precisely plan the day or week of closing. So, what is a seller to do? BAD: If you need to close on a precise date, or no later than a particular date, you'll want to add "time is of the essence" to the standard contract language. With such language, if the settlement does not take place by the date in the contract, the contract automatically becomes null and void. Of note -- I rarely suggest using "time is of the essence". Having the contract "die" after a certain date usually doesn't help either the buyer or the seller. If the buyer wants to buy, and the seller wants to sell, and the final closing documents are one date late, should the deal really automatically die?? BETTER: A better option is to introduce a (positive or negative) financial incentive for the buyer to close in a timely fashion. Perhaps a positive financial incentive for closing on (or before) the scheduled closing date. Or, an increased purchase price or other penalty if the closing is more than X days later than scheduled. BEST: Leave well enough alone --- don't change the standard contract language. Understand the above, but be flexible and willing to adjust, within reason to make the closing process smooth and successful. I hope this is clear --- feel free to leave a comment below, or call/e-mail me for further clarification. | |
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What is market value? |
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I received a call the other day from a Realtor who was representing the seller of a house that I had showed to some of my buyer clients. I was informed that "the owner just had the house appraised, and the appraisal came in $20,000 above the asking price." I believe the conclusion that I was supposed to come to was that the house was a great deal, even at the asking price.
Certainly, this is a bit ambiguous, but my main point is that we can't make any assumptions about what the market value is of a house. | |
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No interior photos? No need to visit that house! |
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 No interior photos? No need to visit that house! Some sellers find it absurd that a buyer would have this mentality as they decide which homes to visit --- they assume that if a buyer is serious, they'll come see the house for themselves even if there aren't any (or very many) interior photos. But buyers are smart, and make reasonable generalizations: most homes without interior photos are hiding something. Perhaps it is the awful condition of the home, or the hideous decor, or the tiny rooms. In most cases where only one photo exists for a house for sale, there is something that the seller doesn't want to have highlighted for the world to see. And thus, as busy buyers pare down their list of homes to view, they will often assume the worst of houses that do not have interior photos. Sellers -- you don't need to go overboard with how many interior photos are posted to the MLS or other web sites, but do include some interior photos so that prospective buyers can have at least some idea of what to expect. | |
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Go For The Gold: How to compete and win as a home buyer |
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Are all buyers created equal? Certainly not --- especially from a seller's perspective in our current market.  Here's how I would rank buyers, from the most exciting to sellers (#1) to the least (#9)...
The good news is that you can (sometimes) take steps to move up this list:
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The tables have turned --- SELLERS are now making offers! |
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 Here's an interesting phenomenon --- in most real estate transactions, the buyer makes the first move, by submitting an offer to purchase a house.In stark contrast to this (time-proven?) norm, I have recently had several Sellers make an offer to sell. More specifically, when it became known that a buyer was seriously considering the purchase of the seller's home, the seller proactively either:
If you are a seller, considering such a strategy, I would advise you to consider that:
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Seller: "C'mon -- do your job -- convince those buyers to buy!" |
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 If only it were that easy!When I am representing a homeowner in the sale of their property, I am:
The reality is that I often don't have that opportunity! Most buyers these days are working with a Realtor and thus have someone representing their interests. I can talk the ear off of their Realtor to try to convince them of the merits of the house that their client has viewed, but I don't have the ability to directly affect the buyers' decision making. Alas, in a market where sales are much slower than previous years, most homeowners really wish that I (or their Realtor) could make that connection with the potential buyers --- and somehow, somehow, convince them to buy! | |
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"Price Reduced" - Are Most Asking Prices Headed Down? |
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 Driving around town, you might see quite a few "Price Reduced" riders on real estate signs. Have you ever wondered whether most sellers are holding fast, or reducing their asking price? Let's take a look....In Harrisonburg and Rockingham County, there are currently 953 residential properties on the market (single family, townhome, condos) without a contract on them. In the past 30 days (June 2008), 134 of those properties had a price change (that's 14% of the active inventory). I'm going to assume most of those were price reductions, although some could have (??) been price increases. (It isn't possible via our MLS to see en masse whether the prices went up or down). In the past three months (April, May, June 2008), 293 of these properties had a price change --- that's 31% of the active inventory. And if we look at all of the listings to see how many have, versus have not EVER had a price change, here's what we find: 384 listings have had a price change (40%) 569 listings have NEVER had a price change (60%) This is rather interesting (in my view), as I suspected that most owners may have reduced their price at some point while it has been on the market. But in fact, most home sellers (60%) have NEVER reduced their asking price. Here are some other interesting stats looking at how long properties have been on the market. | |
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Sellers, here's an old trick --- that never grows old! |
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 I was showing a house last evening and as I pulled up, the homeowner was hurrying out of the house to let us view his home. His departure immediately upon our arrival didn't seem too out of the ordinary, until we walked into the house... and smelled... freshly baked chocolate chip cookies!On the counter we found some fresh-out-of-the-oven cookies and several ice cold bottles of water, along with a note inviting us to enjoy the treats as we looked through the sellers' home. We really did partake of the cookies, and they were great! Many people would suggest that viewing a home is an experience taken in by all of the senses. Thus, if the smells (and tastes) that a prospective buyer encounters while they are viewing a home are pleasing, they will be more likely to have a pleasing assessment of the home. In contrast to our delight upon smelling still-warm chocolate chip cookies, think about how you would experience a home that has a heavy smoke or pet odor! So --- did the cookies and bottled water convince these prospective buyers to buy this particular house? This remains to be seen, but we do have a hunch that the cookies may have been laced with a strong aphrodisiac, as we all fell in love with the house! | |
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We have been trying to sell our home FOREVER!!! |
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A lot of people feel this way right now --- that they have been trying to sell their home for many months (or longer) without success. This situation is mainly a numbers game ---- closings are down 23% this year, and new listings are up 43%. Clearly, there are many more sellers in the market than there are buyers, which creates the impatience for selling. To put your situation in perspective, let's break down the listings that are currently for sale in Harrisonburg and Rockingham County: This information is showing how many months these sets of properties have been on the market without having sold: On the market for 0 - 6 months = 656 properties On the market for 6 - 12 months = 208 properties On the market for 12 - 18 months = 66 properties On the market for 18 - 24 months = 20 properties On the market for 24 + months = 8 properties (yikes!) If your house as been on the market for a few months without having been sold, don't despair --- it is just taking a bit longer for these properties to sell. | |
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Trends in Harrisonburg Housing Supply |
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For some time now, I have provided monthly updates on the months of supply of housing available in four price ranges. (see May's update) Per Andy's request, I will now also graph the trends in these supply indicators.  How it works . . . Months supply is an measure of the relationship between our market's supply and demand in four price ranges. The numbers represent the months of supply of properties available in each month based on average demand per month during the past twelve months. | |
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How To Draw More People To An Open House (I hope) |
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As I discussed a few weeks ago, the value of an open house is often unknown (and perhaps questionable) to home owners, and the Realtors representing them. But at the same time, open houses often get people inside of homes who may not have viewed the home otherwise --- and an important step of a successful sale is to have people view the home. So --- I'm testing out a new strategy to get potential buyers in the door at the open house . . .   I printed (front and back) 500 of these business card sized mini-flyers advertising the open house. Then, almost all of them were distributed on parked cars in an often packed parking lot near the home that is for sale. As you might imagine, I had a lot of internal conversations and questions about doing this:1. Is it o.k. to put things on cars in a parking lot? According to the local police officer who I spoke to, yes, so long as a "no soliciting" sign is posted. 2. Will some car owners be annoyed by the mini-flyer on their windshield? I hope not -- I hope they say "wow, that Realtor really works hard to sell the houses he has listed" -- though I imagine some may be peeved. My apologies!!! 3. Will the owner of the parking lot be upset that some might end up in the parking lot instead of the pockets of the car owners? I hope that all of the car owners take their treasured mini-flyer home --- but I do realize that some may end up in the parking lot. As a result, I imagine that I'll either get a call to come pick them up, or a "no soliciting" notice will be installed (or both!?). 4. Will it actually work? Will I be able to generate more traffic to the open house? Will the house sell as a result? This is to-be-determined. The open house started about 19 minutes ago, so I'll have to provide another update later on. If this new strategy for getting people into open houses does work --- you know that I'll be repeating it to work to sell the other properties I have listed for sale --- if not, I'll be back to the drawing board to think of a new, creative way to market homes! | |
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Housing Supply & Demand - May 2008 |
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This is an illustration of the relationship between our market's supplyand demand in four price ranges. The numbers (6, 11, 14, 25) representthe months of supply of properties currently available based on averagedemand per month during the past twelve months.  This month (May 2008) shows an increase in months supply in all except the lowest price range. The most significant increase was in the $400k+ price range where the months of supply available jumped from 21 months to 25 months. This was largely because of the increased supply of homes --- 152 homes for sale in May as opposed to only 137 in April. | |
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Are CMA's Just For Sellers? |
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 Not at all! They are for buyers as well!First, a CMA is a comparative (or "competitive", depending on who you ask) market analysis --- or, an analysis that compares one property (the "subject property") to other similar properties that have either recently sold, or are on the market. As I explain to my clients, my CMA's attempt to account for all significant aspects and characteristics of a home including square footage, functional space,age, style, condition, and more. Why would a buyer want a CMA? When making a purchase offer, sometimes buyers determine price based on what they think the seller will accept, or what would be a reasonable offer given the asking price. Ignore the asking price! That's not to say that all offers should be low offers trying to "make a deal", but consider these two examples:
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The Effectivness (?) Of Open Houses |
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 I am having an open house today (May 4, 2008, 1:00-3:00) for one of the properties that I am marketing, a 5-bedroom, 3.5 bath colonial with 3,796 SF priced at $469,000, and located at 3064 Briarwood Court in Harrisonburg, VA.I have held several other open houses over the last few weeks, and will have another two weeks from now. So . . . how effective are open houses? I suppose it depends on how we define effective . . . Open houses do (unless nobody shows up) get people inside of homes who may not have viewed the home otherwise. The people who are coming through aren't always qualified to purchase the home they are viewing, and they don't always end up having interest in it, but one important step of a successful sale is to have people view the home for sale. Open houses don't necessarily sell homes. I don't have the exact figure at hand as I am currently writing, but the research shows that only a VERY small percentage of home buyers find the home that they purchase by attending an open house. Some Realtors see open houses as an opportunity to meet new buyer clients. I suppose that could happen from time to time, but certainly, that doesn't accomplish any of the original goals of the owner of the home. Here are some interesting stats to consider from several recent open houses: Property #1 - Prior to the open house, there had been 3 showings of the property. During the open house, 4 groups visited. Property #2 - Prior to the open house, there had been 7 showings of the property. During the open house, 4 groups visited. Property #3 - Prior to the open house, there had been 6 showings of the property. During the open house, 10 groups visited. Property #4 - Prior to the open house, there had been 2 showings of the property. During the open house, 2 groups visited. Property #5 - Prior to the open house, there had been 18 showings of the property. During the open house, 5 groups visited. For several of these homes, the open house generated more prospective buyers inside the home than had seen it to date. However, none of these properties have sold yet, so the open houses didn't accomplish that main goal of selling the house. | |
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Looking Back at Virginia's First Quarter Home Sales |
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 The Virginia Association of Realtors recently released their First Quarter 2008 housing market report, entitled "The Virginia Housing Market in Uncertain Times."Their opening paragraph provides a good summary: The word "uncertainty" sums up the current housing market. A national recession, foreclosures on the rise, tight credit markets, potential federal legislation—all of these factors make it difficult to predict where the market is going. In Virginia, the housing market is performing better than in some other states, although certain local markets within the state are in for a rocky 2008. The report, provided by George Mason University's Office of Housing Policy Research, is based in part on reported sales from around the state of Virginia. The methodology is slightly different than my recent April report, but the numbers are very close. Essentially, sales are down, but prices are up. In the Harrisonburg-Rockingham area, the number of sales was down 21%, but the median price was up 5%, and the average price was up 14%. For even more insight into the first quarter of home sales around Virginia, listen to this media conference call where Realtors from around Virginia (myself included), and staff from George Mason University provide commentary to the media on this recent report. | |
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Now May Be The Best Time To Sell |
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That doesn't mean that it is particularly easy or fast to sell your home right now -- but compared to the last six months, and the coming twelve months, now may be the most likely time that your home will sell. Here's why . . .  Despite lower sales in 2008 than in 2007, and lower sales in 2007 than 2006, sales in Harrisonburg and Rockingham County have continued (in large part) to follow normal month-to-month trends. October-November of 2007 was a bit of an abnormality, but otherwise, you'll see that month-to-month, buyers are coming into and out of the market at the same (proportional) rate as in previous years. This means, that in June, July and August, we will likely have the largest number of closings for the year -- which shouldn't come as any surprise to you. I mention this, however, because some people hear the national news (sales down, prices down), or the local news (sales down by 20%, prices up by 5%), and assume that the month-to-month sales are rather flat, and that it is always a terrible time to sell. Not so. Your home is much more likely to be purchased in the next few months (contract in April, May or June with a closing in June, July or August) than any other time of the year. I'm certainly willing to be proven wrong -- sales during the next few months could defy prior years' month-to-month trends -- but I doubt that will occur. | |
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Change Is Here . . . We Must Adapt! |
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Slower Home Sales . . . Fewer Mortgage Options . . . Appreciation Remains, But . . . | |
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There are quite a few local and national changes occurring right now that greatly affect buyers and sellers. Let's contemplate how we must prepare and adjust. |
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Two Types of Sellers (in Frederick, Maryland, at least) |
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My parents live in Frederick, Maryland, but are currently in Harrisonburg visiting for a few days. In talking to my dad earlier today, he made some very interesting observations about the real estate market in Frederick. It was my dad's assessments that many properties in and around Frederick may have dropped in value as much as $50k - $100k over the past 1-2 years. His informal, and unscientific, gauge of this value change is based on having regularly looked through the real estate section of the Frederick paper, and seeing that buyers have been able to progressively purchase more and more of a house in the $300k-$350k price range (for example). So --- what he is actually observing is a decrease in asking prices over the past 1-2 years, though it is likely that a relatively similar decrease has occurred in the actual selling price. But --- here's the rub --- he also continues to see lots of houses priced $50k - $100k higher than the rest of the market would dictate that they should be. Some sellers seem to be refusing to accept that home values may have changed (rather significantly) in Frederick, Maryland. To bring it back to Harrisonburg --- none of our price ranges have seen a $50k - $100k drop in value, but it is still the case that some sellers price their house within the context of a realistic understanding of our current real estate market --- and some sellers do not! | |
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Buyers, Sellers Must Understand Perspectives |
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From my March article in the Shenandoah Valley Business Journal . . . Cycles exist in every real estate market across the country, and the Shenandoah Valley is no different. Thus, it is essential that buyers and sellers have a firm understanding of their segment of our local market. To better understand our current market, here is a look at several different perspectives: How Many Buyers Feel . . . Even if buyers want or need to purchase, many are still hesitant to move forward with an offer and a purchase, and here are a few reasons why:
What Buyers Should Realize . . . Some buyers have started to realize that now can be a good time to buy because:
How Many Sellers Feel . . . Depending on the price range, and location of a seller's house, and their timetable, a seller may be thinking:
What Sellers Should Realize . . . Some sellers would like to believe it is always a good time to sell, but I would purport that:
Some Conclusions . . . Here is some time-proven buying and selling advice buyers and sellers should consider:
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Do Buyer Incentives Encourage A Sale? |
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 Many sellers think so.....but I rarely meet buyers who think so.You have likely heard of incentives that sellers offer buyers, such as:
But wait --- all such logic goes out the window given the negotiation process! For instance, it is quite possible that when presented with an offer, the seller of the house without free trash service might come off of their price by $8,000, while the seller of the house with free trash service might not negotiate at all. As becomes clear --- the existence of a buyer incentive does not at all guarantee a better opportunity for the buyer --- and buyers know this! Additionally, buyers can ask for and attempt to negotiate any term they so desire in a contract. If you want free trash service from a seller who isn't offering it --- ask! If you want closing costs from a seller who isn't offering them --- ask! I rarely find a buyer who is bashful to include such concessions in an offer, even if it is not being advertised by the seller as being possible. Thus, the non-existence of a buyer incentive doesn't mean that the concession won't happen --- and buyers know this! A few final notes . . .
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Scott Rogers
Coldwell Banker
Funkhouser Realtors
540-578-0102
scott@cbfunkhouser.com
Licensed in the
Commonwealth of Virginia